Demonetisation has exposed the fragile state of the government’s Mahatma Gandhi National Rural Employment Guarantee Scheme. In Uttar Pradesh, in particular, an ever-burgeoning army of migrant labourers returning to their villages for lack of work in the cities, as a direct result of the cash crisis, has led to a mad scramble for employment under the government programme. However, panchayat officials say they cannot take in anymore workers as the scheme is already facing a crippling fund crunch, with villagers yet to get their dues from six months ago.

“The job guarantee scheme has stopped functioning,” said Sewaram, sarpanch of Bhareh village in the state’s Etawah district. “The MNREGA fund has not come for several months now. People demand jobs but we can’t do anything.”

Some 500 km away in eastern Uttar Pradesh, the sarpanch of Kajrinandpur village in Ambedkar Nagar district, Pravin Sharma, is in a similar bind. “In my village, nearly 200 people have MNREGA job cards,” he said. “Nearly 100 of them are yet to get wages for 20-25 days of work they did about six months back. How can we enrol new labourers when there is no fund?”

While the demand for work is growing by the day, employment under the job scheme plummeted nationwide in November, coinciding with the demonetisation of high-value notes. The number of households getting work dropped 23% compared to October, the Times of India said on Tuesday. The report attributed the drop in employment to the squeeze on funds and overstretched panchayats.

Demonetisation-induced reverse migration has worsened the situation, especially in Uttar Pradesh, which is home to a large section of India’s migrant workforce. “The number of job seekers has suddenly grown in the last few weeks,” said Nripendra Singh, sarpanch of Surpatipura village in the state’s Jalaun district. “They blame us, but we are helpless. [Prime Minister Narendra] Modi-ji should either close down the programme or release funds so that we can provide work to those seeking to do manual labour.”

Rural welfare

The fund crunch goes against the provisions of the Mahatma Gandhi National Rural Employment Guarantee Act, which makes it mandatory for the Centre to provide as much money as required for work demanded by the rural poor.

The scheme itself, launched by the Congress-led United Progressive Alliance government in 2005, is aimed at enhancing the livelihood security of the rural poor, by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. It differs from any other public employment programme in the sense that it is a universal and enforceable legal right, concurrent with some of the provisions of the Directive Principles of State Policy that enshrine the ideals of the right to work.

Under the Act, if a job seeker does not get employment within 15 days of applying for it, the government must pay him or her an unemployment allowance, which is one-fourth the wage rate. This provision generally stops village heads from putting the names of job seekers on the master rolls until the funds come through.

Government neglect

The Centre’s approach to the rural job scheme started changing almost immediately after the Narendra Modi government came to power in 2014. In February 2015, the prime minister called it a “living monument of failures” of the previous government. But it has since given no impression that it means to stop the populist scheme, since such a move would be politically disastrous.

However, this does not mean that the Centre has had a change of heart with regard to the job plan. A report in Business Standard in October this year revealed that the Union Rural Development Ministry, the nodal agency for the implementation of the scheme, had used an “off-record WhatsApp chat group” to tell states that the “mad race” for generating work under this programme could not continue and that they must plan more judiciously with the money they had already received. Such an informal moratorium on funds has left the programme in shambles.

“This programme was meant to play a very specific role of providing livelihood security to the rural poor, but it has now virtually fallen apart,” said Arundhati Dhuru, a Lucknow-based social activist and national convener with the National Alliance of People’s Movement, which works for better implementation of the job scheme. “Money has almost stopped coming from Delhi, and arrears of workers have piled up,” she added.

As a result of the government’s neglect, both panchayat leaders and job seekers had started losing interest in the rural job scheme. But this has changed with the government’s demonetisation decision.